Unfortunately, it appears the trading allowance will not be due.
The trading allowance in s783A ITTOIA 2005 was introduced from the 2017/18 tax year for individuals and can be used against either relevant trading income within s783AA ITTOIA 2005 or certain miscellaneous income within s783AB ITTOIA 2005.
As your client was not the composer the royalties will not arise from their profession and so will not be trading income. The receipt of royalties by your client will be taxed as a miscellaneous income. This is confirmed in HMRC’s manuals at BIM50725.
Royalties are taxed as miscellaneous income under Part 5, Chapter 2 of ITTOIA 2005, ( s. 579) if they do not otherwise fall to be taken into account as trading income (ITTOIA 2005, s. 575(1)).
The relevant trading income of an individual for a tax year is income from a trade that is not carried on in partnership and is not rent-a-room income for the tax year.
Miscellaneous income for a tax year, for the purposes of the trading allowance, is all the income arising to the individual in the tax year which would be chargeable to income tax under Part 5, Chapter 8 ITTOIA 2005 (income not otherwise charged).
As royalties are charged to tax as miscellaneous income under a different Chapter of ITTOIA 2005, the trading allowance cannot be used against them.
Basic information on the trading allowance can be found at https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income
Detailed guidance can be found on Croner-I (for subscribers only) at 229-000 £1,000 TRADING ALLOWANCE
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